Rebekkah co. owns 30% in Klaus Joint Venture, Inc. and uses the equity method to account for its interest in the joint venture. Rebekkah has joint control over Klaus Joint Venture, Inc. In 2013, Rebekkah sold inventory to Klaus Joint Venture for P400,000 with a 60% gross profit on the transaction. The inventory remains unsold during 2013 and was sold by Klaus Joint Venture to external parties only in 2014. Rebekkah’s income tax rate is 30%. 1. How much is the adjusted share in profit of the joint venture in 2013 if the joint venture reports profits of P4,000,000? 2. How much is the adjusted share in the profit of the joint venture in 2014 if the joint venture reports profits of P4,800,000?
Rebekkah co. owns 30% in Klaus Joint Venture, Inc. and uses the equity method to account for its interest in the joint venture. Rebekkah has joint control over Klaus Joint Venture, Inc. In 2013, Rebekkah sold inventory to Klaus Joint Venture for P400,000 with a 60% gross profit on the transaction. The inventory remains unsold during 2013 and was sold by Klaus Joint Venture to external parties only in 2014. Rebekkah’s income tax rate is 30%.
1. How much is the adjusted share in profit of the joint venture in 2013 if the joint venture reports profits of P4,000,000?
2. How much is the adjusted share in the profit of the joint venture in 2014 if the joint venture reports profits of P4,800,000?
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